Hale: First Mariner working with regulators despite doubts over future

Eileen Ambrose, The Baltimore Sun

First Mariner Bancorp Chairman and CEO Edwin F. Hale Sr. said Friday that the company is continuing to try to raise capital and to work with regulators who have put the largest Baltimore-based bank under heightened scrutiny for two years.

Hale was responding to an auditor's letter that casts doubt about the bank holding company's ability to remain in business. The letter was included with financial statements filed Thursday with the Securities and Exchange Commission.

A prominent businessman who founded First Mariner, Hale said the auditor's "going concern" warning had long been expected. "We even suspected we could have gotten it at the end of 2009," he said.

But Hale raised concern that this news could cause customers of 1st Mariner Bank to worry and pull out their deposits.

"We don't want to scare anybody," Hale said. "We are working to get this bank back on proper capital footing by continuing to try to raise capital."

Hale declined to provide specifics, citing securities regulations. But he said First Mariner is taking every path it can "to fortify the bank."

By late afternoon Friday, Hale said, the bank had received seven calls from concerned customers, and one closed an account. The customer promised to reopen the account if First Mariner is able to put its problems behind it, Hale said.

First Mariner has been under orders by regulators to boost the bank's capital, although the bank failed to meet the June 2010 deadline. The bank would need to raise at least $37.6 million to meet the target set by regulators, the company reported in its latest SEC filing.

Nonetheless, Hale said: "We are adequately capitalized."

Arnie Danielson, chairman of the bank consulting firm of Danielson Associates in Bethesda, said First Mariner's target of $37.6 million is "not nearly enough."

Regulators usually do not step in to take over a bank "if there is any chance of raising capital," Danielson said. But in this economic climate, it's not easy to raise capital unless a bank's loan problems have been resolved, he said.

"The franchise will attract buyers," Danielson said. But potential suitors might be waiting until federal regulators force the sale of the bank and agree to absorb some of First Mariner's bad loans, he said.

But Hale contends that things are improving at the bank. Delinquencies are down, nonperforming loans have stabilized and the bank is starting to sell some of its foreclosed properties.

"We have been able to dispose of some of the properties for the first time in a couple of years," he said.